Free CAM Cap Calculator

A non-cumulative cap limits the year-over-year increase to a fixed percentage (e.g., 5%) of the prior year's actual expenses. A cumulative cap limits the increase to a fixed percentage of the base year, compounded annually. The key difference: cumulative caps bank unused increases from low-expense years, allowing larger jumps later. Non-cumulative caps reset every year with no carry-forward.

When actual expenses in a given year come in below the cumulative cap ceiling, the difference between the ceiling and actual expenses is 'banked.' In future years when expenses spike, the landlord can recover above the simple annual percentage because the cumulative ceiling has been growing each year regardless of actual spend. This carry-forward bank can represent tens of thousands of dollars over a 5-year lease term.

Many leases apply caps only to controllable expenses (costs the landlord can influence, like janitorial, landscaping, and repairs). Non-controllable expenses (property taxes, insurance, utilities) are typically excluded from cap calculations and passed through at actual cost. When modeling caps, separate controllable from non-controllable expenses first, then apply the cap only to the controllable pool.

Cumulative caps generally favor landlords because unused cap capacity carries forward. In years with low expense growth, the bank builds up, giving the landlord room to recover higher costs in future years without hitting the cap. Non-cumulative caps are simpler but can create situations where legitimate cost increases exceed the allowed year-over-year limit with no recourse.

For a cumulative cap, multiply the base year expenses by (1 + cap%)^n where n is the number of years since the base year. For example, with a $100,000 base year and a 5% cumulative cap, the year 3 ceiling is $100,000 x 1.05^3 = $115,763. The tenant pays the lesser of actual expenses or this ceiling.